W.P. Carey: Rising Rates, Rising Rents

REITer's Digest 4.6K Followers Follow Summary W.P. Carey faces significant headwinds from rising interest rates, compressing acquisition spreads, and refinancing risks, earning a Hold rating. WPC's CPI-linked leases, covering 49% of same-store leases, offer some insulation, but many are capped, limiting upside from inflation-driven rent growth. Acquisition cap rates have compressed to just below 7.5% while WPC's cost of capital rises, reducing the accretiveness of new deals. Liquidity has improved to $2.7 billion and net debt/EBITDA declined to 5.5x, but near-term refinancing will likely drag on AFFO growth. Richard Drury/DigitalVision via Getty Images I recently published an article on the effects of a rising ten-year Treasury yield on REITs. I called it the REIT Bloodbath as rising bond yields begin to force REIT shares lower. VNQ has This article was written by REITer's Digest 4.6K Followers Follow REITer's Digest. Follow for more. Analyst’s Disclosure: I/we have a beneficial long position in the shares of O, ADC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.